‘Gilets jaunes’ protesters on the street in Paris last November © Getty
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‘In business schools, we usually do not teach geopolitics,” says Cedomir Nestorovic, a professor and executive MBA academic director at Essec Business School in Singapore. But in an era of unprecedented geopolitical volatility, in which the settled assumptions, and many of the institutions, of the postwar global order are being undermined, that may have to change.

The accumulation of challenges to the normal rules of engagement in international commerce and political economy can seem bewildering. Just consider the events of a single week before Christmas.

Ken Hu, chief executive of Chinese telecoms group Huawei, attacked the US and its allies for sowing suspicions about the company’s equipment because of “ideological or geopolitical concerns”. Meanwhile, the price of American soyabeans plunged as the volume of purchases from China fell, throwing into doubt the “truce” that US president Donald Trump had declared in his trade war with Beijing.

In the UK, the Society of Motor Manufacturers and Traders, a trade association, warned that a “no-deal” Brexit risked “destroying the [UK] automotive industry”. Private-sector business activity in France slowed for the first time in two and a half years amid successive weekends of attritional and often violent protest by the gilets jaunes movement. Meanwhile, in Brussels, the European Commission struck an uneasy deal with Italy, after the budget presented by the populist government in Rome had threatened to breach the EU’s fiscal rules.

Does this mean that the MBA will have to be rethought from the foundations up? It is clear that business schools will at the very least have to adjust to these new conditions. Indeed, this is already happening.

Chinese president Xi Jinping, left, and Donald Trump have clashed on tariffs © Kyodo News via Getty Images

“Geopolitics are becoming more and more important,” observes Jan-Emmanuel De Neve of the University of Oxford’s Saïd Business School, “both in the western and emerging market spheres.” Prof De Neve, associate professor of economics and strategy, does not think this means the MBA has to be “rethought as such”, but it does have to “evolve”. “Students are feeling a need to navigate this political turmoil,” he says.

But what are the practical implications for those delivering courses in the classroom? Stuart Robinson, MBA director at the University of Exeter Business School in the UK, says: “The type of conversations you’re having today are different, so we teach things like understanding the financial crisis. We’re trying to make students understand the drivers that create these problems.”

Prof De Neve argues that the current turmoil, both in relations between states and inside states themselves, in the developed world and emerging markets alike, has sharpened the need for MBA students to explore the link between politics and business. “Interrogating the integration of market and non-market strategy becomes critical for successful businesses,” he says. “Good business leaders know the rules and regulations well, but the very top managers also have an understanding of how these rules are shaped in the first place.”

Increasingly, they also require an understanding not only of how rules are shaped (and how regulatory authorities operate), but of the forces that are leading those rules to be rewritten or, in some cases, simply overturned.

An anti-Brexit demonstration in London last September © Getty

Prof De Neve admits he is “pushed to think quite hard about the links between business and politics”. To help students wrestle with such matters, he has devised a two-week simulation in which they play the roles of heads of state, corporate leaders and trade union bosses as they deliberate on a $10bn contract to build a new power plant in India. “This allows [students] to navigate the interaction between politics and business at the highest levels and understand how political dynamics help to shape business outcomes,” Prof De Neve says.

Some practitioners, however, think the challenge the new world disorder poses for those running MBA programmes is as much conceptual or intellectual as it is pedagogical. For example, Luigi Zingales, director of the Stigler Center at the University of Chicago Booth School of Business, believes the notion of “political risk”, a staple of business courses for years, is no longer adequate. “It’s a bit of a dated perspective [to think] developing countries display a lot of political risk and developed countries are fine,” he says.

The events of the past 10 years, Prof Zingales argues, make such an outlook untenable. “This naïve view was overturned by the financial crisis,” he says. “All of a sudden you saw developing countries like Chile or Brazil being relatively safe, and the US and UK in the midst of profound financial upheaval.” That financial turmoil was, of course, eventually followed by roiling political change in the developed world (not to mention Brazil). “The election of Donald Trump and the Brexit vote have raised the question of how politics impacts business,” Prof Zingales says.

Nathalie Belhoste, an assistant professor at Grenoble Ecole de Management in France, insists the converse is also true. Business students, she says, need to understand that companies are political actors too. “Every time a corporate enters a territory, there is a risk of destabilisation,” she says.

US president Donald Trump at a rally last August in Pennsylvania © Bloomberg

However, in a global market for business education in which academic institutions seek to attract students from around the world, broaching geopolitical issues such as these can be a delicate undertaking. “We may have made assumptions in the past about the west being stable that we wouldn’t make today,” says Exeter’s Robinson. “I am very conscious that there are different voices in the classroom.”

Prof De Neve agrees. “More and more students on MBA programmes are Russian, Chinese or Indian,” he observes. “Yet traditional models focused purely on market strategy are very US- and European-oriented. If you teach these models with 15 per cent Indian students [and] 10 per cent Chinese and Russians, that doesn’t come across as very realistic. They understand contexts in which it is government that picks winners rather than the market.”

Business school academics are used to teaching students about the varieties of market capitalism, and the differences between liberal market economies, such as the US and UK, and the co-ordinated or social market economies of northern Europe. But if Prof De Neve is right, they should now be exploring varieties of state capitalism, too. “You have state-owned enterprises in China,” he says. “But how do emerging markets like Brazil or Russia do it differently?”

These are questions that are likely to endure long after the current squalls of political instability have subsided.

Copyright The Financial Times Limited 2019. All rights reserved.

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